We’re still not quite getting this externalities and Pigou thing quite right. Iain says :

First, the case for Pigou Taxes is all about “correcting” behavior to reduce external costs.

No, that would be a punitive tax, like the ones on cigarettes and other such sin taxes (and if anyone tries to claim that those are Pigou taxes I shall snarl at them). Pigou taxes are not intended to correct behavior, although they may have that effect. The aim is that currently there are effects of the individual’s course of action that are not already encompassed in the price system, and we’d like to have those included in said price system. Only if prices reflect all currently available information can we have an efficient market, after all.

The benefits that Iain mentions are already in the price system, but the disbenefits to others are not, in at least some cases. We don’t necessarily want people to change their behavior to reduce external costs: we just want them to pay for them so that we get the socially optimal amount of that behavior.

Of course, if other taxes don’t fall with the imposition of such taxes then it is indeed as Iain says, just more being squeezed out of us and at that point those proposing it can go take a running jump.